Yahoo! Becomes Interesting Again

The rumor that came out this morning from the UK that Yahoo! (YHOO) had put in a bid of $250 million for YouTube network Fullscreen makes sense.

The Peter Chernin-backed network has 380 million subscribers and three billion monthly views. It's huge and has the right pedigree.

Yahoo! has been on the lookout for any ways it can sell more premium video ads. It has been building up its supply of content organically and through acquisition for well over a year now.

Yahoo!'s stock is up this morning, in part due to this news but also likely due to the news that came out late yesterday afternoon that Alibaba had selected the NYSE as the stock exchange where it will list its shares under the ticker "BABA."

It has been well known that Alibaba has been looking at Friday, August 8 as the date it will IPO in New York, given that it is a favorable one under Chinese numerology. Yesterday's news about the NYSE decision seemed to remind people that this date is only six weeks away from today.

That means that the Alibaba IPO road show will have to get started very soon. As this happens, investors know that they will start to hear more from management about the company's plans for future growth and how its second quarter is going.

Despite some worrying that the Alibaba IPO won't live up to the hype among some investors, yesterday's GoPro (GPRO) IPO is a reminder that there still is insatiable demand among lots of investors in this market for a growth story. And Alibaba has a heck of a growth story to tell.

For all these reasons, Yahoo!'s shares are catching a bid today while the overall market is flat. Yahoo!'s shares have been snoozing ever since the initial announcement of the Alibaba IPO filing. The shares had sunk to very low levels placing almost no value on the Yahoo! core business.

As I've said to some friends, I don't think Yahoo!'s core business is going to set the world on fire but I think it's worth at least as much if not double what AOL (AOL) is worth.

I expect Yahoo!'s shares to rally as the Alibaba IPO road show continues in the next few weeks.